F I L E D

United States Court of Appeals

Tenth Circuit

UNITED STATES COURT OF APPEALS June 9, 2006

Elisabeth A. Shumaker
Clerk of Court

TENTH CIRCUIT

CO LO RA DO INTER GOVERNM EN TA L RISK

SHARING AGENCY, a Colorado resident,
Plaintiff-Counter-Claim-Defendant-Appellee,
v.
NORTHFIELD IN SURANCE COM PANY, a
M innesota Insurance Corporation, and TIG
INSU RANCE COM PA NY, a California Insurance
Corporation,
Defendants-Counter-Claimants-CrossClaimants-Appellants,

Nos. 05-1186
& 05-1208
(D.C. No. 04-M K-2612)
(D . Colo.)

and
C ITY O F SA LID A , C OLO RA DO,
Defendant-Counter-Claimant-Cross-ClaimantAppellee.

ORDER AND JUDGMENT *

Before KELLY, SE YM OU R, and H ARTZ, Circuit Judges.

This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

Northfield Insurance Company (Northfield) and TIG Insurance Company

(TIG) (insurers), bring this appeal challenging the district courts remand of the
instant action to state court. Because the court remanded for lack of subject
matter jurisdiction, see 28 U.S.C. 1447(c), we do not have jurisdiction to review
the district courts order. 28 U.S.C. 1447(d). The appeal is therefore
dismissed.
This case arises out of an insurance dispute. The City of Salida, Colorado
(the City), had a pool building which suffered substantial structural damage after
a severe snow storm. At the time of the damage, the City was one of several
members of the Colorado Intergovernmental Risk Sharing Agency (CIRSA), a
self-insurance pool. Under this group insurance agreement, CIRSA was obligated
to pay up to $250,000 to the City for property losses. The pool building damage
and related business losses exceeded $3 million, and CIRSA paid approximately
$1.3 million of these losses. The additional damage amounts were to be covered
by Northfield and TIG, 1 who provided insurance coverage to both the City and
CIRSA . Northfield and TIG declined to provide coverage for the excess damage
amounts, claiming the snow storm was not the cause of the damage to the pool
building.

Northfield is incorporated under the law s of the State of Iowa, and has its
principal place of business in M innesota. TIG is incorporated under the laws of
the State of C alifornia, with its principal place of business in Texas.
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On December 19, 2003, the City filed a lawsuit against CIRSA , Northfield,
and TIG in Colorado state court regarding coverage issues arising under the group
insurance agreement as well as under the contracts with the insurers. On the same
date, CIR SA filed a separate but similar lawsuit against the City and the two
insurers. The two cases were subsequently consolidated because the cases
presented identical questions of law and fact, i.e.,
[w]hether the alleged damages to the . . . pool, . . . were caused by a
snow storm . . . . W hether the City . . . and CIRSA fulfilled their
obligations under Northfields insurance contract. W hether CIRSA
fulfilled its obligations under TIGs insurance contract. . . [and the
question of] N orthfields, CIRSAs, TIGs, and the C ity of Salidas
legal rights and responsibilities under their respective insurance
contracts for the claims based on the alleged damage to the City[s] .
. . hot springs pool.
Aple. App. at 2. Upon consolidation, and consistent with the caption of CIRSAs
complaint, CIRSA was deemed the plaintiff, and Northfield, TIG and the City
were named as defendants.
On December 17, 2004, nearly a year after this action was instigated,
Northfield and TIG filed a Notice of Removal in federal district court. The
insurers conceded that the face of the pleadings exhibit[s] a lack of diversity . . .
. A plt. App. at 433. However, they incorporat[ed] by reference . . . arguments
in their Joint M otion for Realignment [claiming t]he parties in this action should
be realigned to reflect their true interests, thus establishing diversity. Id.
Despite the insurers reference to a Joint M otion for Realignment, that document

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was not tendered to the district court until December 20, 2004, three days after
the Notice for Removal was submitted. The district court sua sponte rejected the
removal motion on December 27, 2004, noting the insurers failed to comply with
the local rules regarding motion filing. See D.C. C OLO . LC IV R 7.1; Aple. App. at
9. On December 29, 2004, nine days after the insurers filed their Notice of
Removal, they submitted an Amended Joint M otion for Realignment, claiming
the City . . . should be recognized as a party plaintiff rather than, as indicated in
the caption, as a defendant in this action . . . . Aplt. App. at 488. If realigned,
diversity would exist between the parties.
The City and CIRSA moved for remand. In granting the motion, the
district court referenced the insurers concession that the pleadings failed to
exhibit the required diversity for federal jurisdiction and the insurers contention
that perhaps the jurisdictional defect can be remedied by a
realignment of the parties . . . .
....
As a general rule, diversity of citizenship is determined at the
commencement of the law suit. In this case, whether w e determine it
at the commencement of the state lawsuit or we determine it at the
time the notice of removal was filed makes no difference. The way
the parties are configured, there is no diversity. If there is no
diversity, this court cannot exercise jurisdiction to remedy the
problem.
Aplt. App. at 943-44. Furthermore, in denying the insurers subsequent M otion
for Reconsideration, the court expanded upon its initial decision to remand the
action.

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[E]ven if the Court agreed with the movants that it has the
jurisdiction to realign parties in aid of removal, it would nevertheless
find it inappropriate to do so in this case. In cases of removal, the
federal courts subject-matter jurisdiction is determined based on the
contents of the Notice of Removal. Although the movants Notice of
Removal in this case identifies the need to realign parties, it offers
no argument for doing so; instead, it purports to incorporate by
reference a Joint M otion for Realignment. However, the M otion for
Realignment was not filed contemporaneously with the Notice of
Removal; rather for reasons not present in the record, it was not filed
until three days later. Because the M otion for Realignment was not
in existence at the time of the Notice of Removal, the Court cannot
consider it for the purpose of determining jurisdiction.
. . . Thus, because the Notice for Removal offers no substantial
argument warranting realignment, the Court lacks subject-matter
jurisdiction over this action.
Aplt. App. at 966-67 (citations omitted). Northfield and TIG filed timely notices
of appeal from the remand order.
In dismissing this action, we are guided by the federal removal statutes. In
particular, 28 U.S.C. 1447(d) directs that [a]n order remanding a case to the
State court from which it was removed is not reviewable on appeal or otherwise .
. . . 28 U.S.C. 1447(d). W hile section 1447(d) would appear to bar appellate
review of all remand orders, the Supreme Court has limited section 1447(d)s
application to grounds specified under 28 U.S.C. 1447(c). 2 According to the

Section 1447(c) provides:

A motion to remand the case on the basis of any defect other than
lack of subject matter jurisdiction must be made within 30 days after
the filing of the notice of removal under section 1446(a). If at any
time before final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded.
28 U.S.C. 1447(c).
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Court,
[a]s long as a district courts remand is based on a timely raised
defect in removal procedure or on lack of subject-matter jurisdiction
the grounds for remand recognized by 1447(c) a court of
appeals lacks jurisdiction to entertain an appeal of the remand order
under 1447(d).
Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995).
A district courts decision to remand for lack of subject matter jurisdiction
or for a procedurally defective removal does not automatically render its decision
unreviewable by our court. Archuleta v. Lacuesta, 131 F.3d 1359, 1362 (10th Cir.
1997). Rather, we will determine by independent review the actual grounds
upon which the district court believed it was empow ered to remand. The district
court need not be correct in its determination that it lacked subject matter
jurisdiction, however, so long as it made that determination in good faith. Id.
(citing Flores v. Long, 110 F.3d 730, 732, 733 (10th Cir. 1997)). Therefore, [i]f
a district court orders remand [for lack of subject matter jurisdiction, or improper
removal procedure], 1447(d) absolutely prohibits appellate review of the order,
and we adhere firmly to this prohibition even where we believe that the district
court was plainly incorrect. Kennedy v. Lubar, 273 F.3d 1293, 1297 (10th Cir.
2001) (citing Archuleta, 131 F.3d at 1363).
A full review of the record compels the conclusion that the district courts
remand of this action was predicated on the absence of subject matter jurisdiction
due to the parties lack of diversity. In granting the Citys M otion for Remand,
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the district court held that diversity was lacking both at the time the law suit
commenced and when the Notice for Removal was filed. See Laughlin v. Kmart
Corp. 50 F.3d 871, 873 (10th Cir. 1995) (jurisdiction should be determined from
allegations of complaint or allegations in notice of removal). The court therefore
concluded it lacked jurisdiction to realign the parties to create diversity. In
further denying the insurers M otion to Reconsider, the court explicitly stated it
did not have jurisdiction to realign the parties because the insurers Notice of
Removal provided only conclusory assertions that realignment was appropriate
and lacked any substantial argument warranting realignment. Aplt. A pp. at 967.
Even if, for the sake of argument, the district court should have exercised
jurisdiction to realign the parties, we cannot entertain the insurers claims on
appeal. The district court remanded this action based on its belief that it lacked
subject matter jurisdiction over the controversy. Section 1447(d) therefore bars
us from reviewing that ruling.
Accordingly, the appeal is DISM ISSED.
ENTERED FOR THE COURT

Stephanie K. Seymour
Circuit Judge

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